Practical Perspectives on Intellectual Property Legal Developments

Kappos to Leave His Post, What Next . . .?

As practitioners learned, The United States Patent and Trademark Office (USPTO) has confirmed that Director David Kappos plans to retire from his post in January 2013 after nearly three and a half years of service to the USPTO.

Kappos’ Tenure

Director Kappos was sworn in as Under Secretary of Commerce for Intellectual Property and Director of the USPTO on August 13, 2009. His tenure has been evidenced by major change both within the USPTO and through the enactment of the Leahy Smith America Invents Act (herein “AIA” or “Act”) impacting global patent practice.

Director Kappos has been chiefly responsible for stewarding the implementation of rules for patent examination and patent prosecution based on the new law. The Act has largely brought the U.S. in line with European and Asian countries awarding patents on a “first to file” instead of a “first to invent” basis. The AIA is arguably the single most dramatic shift in patent practice in fifty years, overshadowing the introduction of patent application publications in 2001, the introduction of provisional applications in 1994, and perhaps even the signing of the Patent Cooperation Treaty in 1968. Implementation efforts, particularly in light of the new first to file provisions, have been onerous. However, except for provisions of the AIA that do not go into effect until February of 2013, implementation is essentially complete.

While first to file is the hallmark of the AIA, other newly enacted provisions have ushered considerable transformation to Office practice, including: Inter Partes Review, Post Grant Review, Supplemental Examination, and Third Party Preissuance Submissions, to name other newly enacted provisions . Moreover, during his tenure and in accordance with the AIA, Kappos set up the USPTO’s first-ever satellite office in Detroit and identified other satellite locations in Denver, Dallas, and San Jose. Though Kappos most likely will be remembered for implementation of the AIA, prior to assuming his role as IP chief, Kappos’ top priority was to dramatically reduce the time to patent examination process for newly filed applications.

Under his watch and to address this priority, Kappos significantly increased the number of patent examiners from 6,200 in 2010 to almost 8,000 today. He decreased the backlog of patent applications awaiting first Office Action before the USPTO from 770,000 at the end of 2008 to about 605,000 in 2012. The USPTO, under Kappos’ leadership, has achieved this reduction despite new application totals increasing over five percent (5%) per year during the same period. As further evidence of Kappos’ success in the area, the average time for applications pending a first Office Action decreased from 25.8 months in 2009 to a projected 21.9 months in 2012 and the average total pendency decreased 34.6 months in 2009 to a projected 32.4 months in 2012.

Finally, Kappos has also implemented the track one prioritized examination system and with the European Patent Office jointly launched the Cooperative Patent Classification System (CPC) to bringing harmonization to patent classification and search resulting in increased efficiency.

The Future

As noted above, reducing the patent application was Kappos’ mandate upon entering the USPTO. Yet, as this back log dwindles, what should the USPTO do with all the additional examiners? The obvious choice may be to simply allow attrition to naturally reduce patent examiner ranks. However, increasing examination quality by maintaining the ranks and decreasing examiner counts is a notion that warrants consideration.

Additionally, the USPTO is criticized for issuing too many patents. During fiscal 2012, the Office issued 270,258 patents, an increase of 80,000 since Kappos joined the USPTO in 2009. This criticism is especially true regarding software innovations. Critics complain that patents often do not truly break new ground and choke an overburdened court system with unnecessary lawsuits. It is estimated that patent trolls pursuing weak or invalid software patents cost the economy upwards of $83 billion per year.

In a recent speech before the Center for America Progress and on this topic, Kappos told USPTO critics to “give it a rest already, and give the AIA a chance to work. Give it a chance to even get started. But we’re not done. Not nearly.” Apparently, Director Kappos meant the royal we, as he leaves this and other unfinished USPTO business to his successor.

It is expected that Teresa Stanek Rea, the USPTO’s deputy director, will replace Director Kappos as Acting Director. Before joining the USPTO in 2011, Ms. Rea was a partner in Crowell & Moring LLP’s Washington, D.C. office.

In short, Director Kappos’ impact on the USPTO has been meaningful and positive. He will surely be missed by both the business community and practitioners alike.

Luis J. Diaz is a Director in the Gibbons Intellectual Property Department.

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